LAAD Exhibition: Showcase of Brazilian Self-Reliance

The 9th edition of Latin America Aerospace and Defence (LAAD) exhibition was held on April 9-12, 2013, at Riocentro in the picturesque city of Rio de Janeiro, Brazil. An estimated 30,000 visitors attended the four day event, the biggest defence exhibition in this part of the world. With 720 exhibitors showcasing their latest products, services and technologies, the event was also attended by 65 official delegations from around the world. The biggest attraction of the event was however the Brazilian arms manufactures who not only participated in a big way, but showcased a wide variety of items, ranging from small arms to nuclear submarine, transport aircraft and country’s first turbojet engine. In some way the exhibition projected Brazil’s self-reliance model to revive its defence industry which underwent through a period of contraction after achieving some spectacular success in 1980s.

Like many other developing counties, Brazil also believes in self-reliance in arms manufacturing. However what distinguishes Brazil from many of its counterparts is its unique pursuit of defence industrialization. Some of key features of its self-reliance approach are: unambiguous policy goals, user participation in defence projects, an aggressive offset policy, and an overwhelming participation of private sector in defence production.

Brazil is one of the rarest countries in the developing world to have articulated comprehensive documents on national defence policy and strategy. Among others, the documents lay a strong emphasis on self-reliance in key strategic sectors. For instance, the Nation Strategy of Defence (NSD), published in 2008, identifies three key sectors – cybernetics, space and nuclear – in which the country would retain “capacities and technologies under the national domain.” For defence industry, the NSD emphasises on national development and production of a number of high-value projects including conventional and nuclear submarines; fighter and transport aircrafts; and electronic warfare equipment and platforms among others. While identifying these areas, the NSD recognises two vital aspects: the need for “special legal, regulatory and taxation regime” to protect the domestic industry against the market uncertainty; and the importance of strategic partnership with other counties. Unlike some countries which often take arms import decision on cost consideration, Brazil gives much emphasis of technology transfer and strategic partnership. Its deal with France for construction of both conventional and nuclear submarines for the Brazilian navy is a clear example in this regard.

A striking feature of Brazilian defence industry is the strong support of the Brazilian armed forces. Unlike in many other counties, the Brazilian armed forces run several military research institutes, which work very closely with the industry, including the private enterprises. These institutes are known for providing training to engineers and scientists and passing on technology to the industry often free of cost. The culture of running R&D institutes and working closely with the manufactures has provided the defence industry the much needed confidence that is required for big, risky projects. This is evident from the Embraer’s KC-390 programme to develop a military transport aircraft that can only be rivalled in its class by US-based Lockheed Martin’s hugely successful C-130 J aircraft. Despite knowing all the technological complexities and industrial limitations, the Brazilian air force has extended all its support to the programme. This has only emboldened Embraer to undertake what is Brazil biggest ever aeronautics project. What is of greater importance is that Embraer is confident of beating its American rival aircraft in terms of both price and technology!

A vital element of Brazil’s defence industrial process has been industrial compensation or offsets. Like many other countries Brazil demands offsets while procuring arms from abroad. However unlike many other countries, it pursues an aggressive offset policy. For example, unlike India which demands offsets when the procurement cost exceeds more than $55 million, Brazil’s threshold is only five million dollars. Moreover unlike India which asks offsets amounting to 30 per cent of contractual value, Brazil’s is as high as 100 per cent, indicating Brazil’s determination to extract the maximum from its foreign purchase.

Despite its centre-left political dispensation, Brazil largely follows a capitalist culture for its arms production. Majority of its defence industry, including the giant Embraer, (which was privatised in 1994) is in the private sector. Unlike some of its BRICS partners, particularly India where there is a trust deficit between the government and the private enterprises, Brazilian defence industry does not have such issue. On the other hands the Brazilian private sector is responsible for executing some of the big and strategic programmes, including nuclear propulsion for submarine. To a large extent, the Brazil’s free enterprise policy for defence production has not only led to a huge growth of the industry (which counts more than 150 enterprises in 2011, up from less than 100 in 2009), but promoted cutting edge innovation in defence technology as is seen from the unveiling of country’s first turbojet engine by a start-up company, Polaris.

Brazil’s self-reliance model can offer some lessons to countries like India which also believes in self-reliance in defence production but has largely failed. This is amply evident from the country’s poor self-reliance index which dithers around 35-40 per cent against the national goal of 70 per cent. Incidentally, some of the age-old constraints in India’s self-reliance drive are the strong features of Brazil’s self-reliance model. Among others what India can imbibe from the Brazilian model for improving its defence production setup include a strong policy framework, user participation in defence projects, a strong offset policy and greater trust with the private sector.

Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India.